Gold Up and Down, More QE Possible

July 9, 2012 – The spot price of gold stayed steady above $1,580 per troy ounce on Monday during morning trading in London, in range with the close of last week.

Prices finished last week lower, once again below the $1,600 per troy ounce level as of Friday, possibly a direct reaction to the release of June’s US nonfarm payroll data. Employers added 80,000 jobs to payrolls during the month of June, a far cry from the 97,000 expected, but better than the 69,000 of the previous month. The unemployment rate held steady at 8.2 percent.

Analysts at Scotia Mocatta categorized last week as the ninth consecutive week in which gold alternated between its up and down oscillations. The market has not yet decided on the downward trend below $1,500 or a recovery back upward toward $1,640, roughly.

A trader at Phillip Futures in Singapore called sentiment in the markets “fragile.”

The price of silver reached highs of $27.39 per troy ounce in the morning, up 1 percent from the close last week. Commodities gained, generally, along with bonds while the euro reached a fresh two-year low before regaining ground.

The president of the Federal Reserve Bank of Chicago, Charles Evans, relayed in a speech that “economic circumstances warrant extremely strong accommodation.”

The bank president added that more monetary accommodation is necessary in order to stimulate output in order to realize potential.

The president of the Boston Federal Reserve Bank, Eric Rosengren, told reporters that it is “appropriate to have more quantitative easing.”

In Europe, the yields on Spanish 10-Year government bonds gained to be back above the 7 percent level in morning trading after news that government tax receipts dropped 1.5 percent during the first five months of the year.

In Greece, the new coalition government won a confidence vote that was taken in the Greek parliament on Monday. This is the same coalition government that was voted into office because of their pro-bailout stance.

Though troubles in the Eurozone are causing a run to safe havens, there is currently a preference for the US dollar and US Treasury notes where in the past investors have fled to gold.

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